For most residential mortgages in Canada, the borrower pays nothing to use a mortgage broker. The lender pays the broker a commission when the mortgage funds, so a typical buyer with good credit gets the service at no direct cost.
Fees only appear in specific situations, usually private mortgages or difficult credit files. Knowing when a fee applies, and how much is reasonable, protects you from paying for something that should be free.
Pekoe Mortgages is a licensed brokerage (FSRA Licence #13321 in Ontario, RECA licensed in Alberta), and we are upfront about how we get paid on every file.
Do mortgage brokers charge the borrower a fee?
In the large majority of prime residential deals, the broker does not charge the borrower anything. The lender pays a finder’s commission when the mortgage completes, and that covers the broker’s work.
This is the standard arrangement for buyers and homeowners with solid income and credit. If you qualify with a major lender, you should not expect to pay a broker fee.
A fee enters the picture only when a lender will not pay a commission, which happens with private lending and some specialised files. We explain who pays in more detail in our guide on who usually pays a mortgage broker’s fees.
How do mortgage brokers get paid?
Mortgage brokers are paid by the lender through a commission called a finder’s fee, calculated as a percentage of the mortgage amount. The borrower does not see this cost because it comes out of the lender’s side.
The commission is earned only when the mortgage funds, so the broker is motivated to place your file with a lender that will actually approve it. The rate a broker earns does not usually change the rate you are offered.
Brokers work with many lenders, from big banks to monoline lenders that only operate through brokers. This access is why a broker can often find a sharper rate than a single branch.
When do mortgage broker fees apply?
Broker fees apply when the lender does not pay a commission, which mainly means private mortgages, alternative lending, and complex credit situations. In these cases the broker charges the borrower directly for the work involved.
The table below shows the common scenarios and whether a fee is likely.
| Situation | Who typically pays |
|---|---|
| Prime mortgage, strong credit | Lender pays, no borrower fee |
| Bank or monoline approval | Lender pays, no borrower fee |
| Private mortgage | Borrower pays a broker fee |
| Bruised credit or hard-to-place file | Borrower may pay a fee |
| Commercial mortgage | Borrower usually pays a fee |
How much are typical mortgage broker fees?
When a fee does apply, it is commonly quoted as a percentage of the mortgage amount, often in the range of one to two percent on a private deal. The exact figure depends on the complexity of the file and the lender involved.
Any fee must be disclosed to you in writing before you commit, and in Ontario this disclosure is required under FSRA rules. You should always know the dollar amount, not just a percentage.
A legitimate fee is tied to genuine work, such as placing a file that no prime lender will touch. If the deal is straightforward, there is rarely a reason to pay one.
What are the red flags to watch for?
The clearest red flag is a broker asking for a large upfront fee before any work is done or any lender has committed. Reputable brokers are paid on funding, not in advance.
Watch for these warning signs before you hand over any money.
| Red flag | Why it matters |
|---|---|
| Large upfront fee | Legitimate fees are usually paid on closing, not before |
| No written disclosure | Fees must be disclosed in writing under provincial rules |
| A fee on a prime deal | Strong files should be lender-paid, not borrower-paid |
| Vague or shifting numbers | You should always get a clear dollar amount |
If any of these appear, pause and ask questions. A licensed broker will explain the fee and the reason for it without hesitation.
How can you avoid paying unnecessary fees?
The best way to avoid an unnecessary fee is to work with a licensed broker who confirms upfront whether your file is lender-paid. For most buyers with good credit, the answer is that it is.
Ask early and directly whether a borrower fee applies to your situation. A straight answer tells you a lot about who you are dealing with.
If you are not sure where your file falls, a quick conversation settles it. Have a question about whether a fee applies to you? Chat with our team or AI assistant directly on pekoe.ca.
Frequently Asked Questions
Do I have to pay a mortgage broker in Canada?
Usually not. For prime residential mortgages the lender pays the broker a commission, so the borrower pays nothing. Fees typically appear only with private mortgages or hard-to-place credit files.
How much do mortgage brokers charge when there is a fee?
When a fee applies, it is often one to two percent of the mortgage amount on a private deal, depending on complexity. The fee must be disclosed to you in writing before you commit.
How do mortgage brokers make money if they are free?
Lenders pay brokers a finder’s commission when the mortgage funds. This is built into the lender’s side of the deal and does not usually change the rate you are offered.
Is it cheaper to go directly to a bank?
Not necessarily, because a broker shops many lenders while a branch offers only its own products. The broker’s commission is lender-paid on prime files, so using one does not add a cost for most borrowers.
When should I be worried about a broker fee?
Be cautious if a broker asks for a large upfront fee, will not disclose the amount in writing, or charges a fee on a straightforward prime deal. Those are signs to ask more questions before proceeding.
Get a Straight Answer on Costs
You should never wonder how your broker gets paid. A licensed Pekoe broker will tell you plainly whether your file costs you anything.
Talk to a Pekoe broker and get clear answers on fees before you commit.